Stock options are highly flexible investment tools. They are vital for directional investments and risk hedging since its leveraged characteristics can be used in different market conditions for the purpose of investment or managing investment risk. Stock options are exchange-traded contractual financial agreements jointly agreed by both buyers and sellers, and settled by the clearing house with designated individual stocks (mainly blue-chip and include state-owned stocks of red chips and H shares available for trading). The buyers hold a long position, while the sellers hold a short position. Clients trade stock options to meet different investment objectives including: 

● Leveraged trading in up market or down market
● Reducing transaction costs
● Hedging market risks, or locking in the ledger share profits
● Increasing trading income
● Setting buying price of stocks
● Using combined option strategies for trading needs in different market conditions
(Up market or down market with high or low market volatility)

1. CallOptions

Purchasing Call Options (Long Call)：
Expect the underlying stock to go up. Buyers are required to pay the option premium, and no margin requirement is needed. Profit is subject to the potential profit on the stock upside, and maximum loss is limited to the premium paid to the call options.

Selling Call Options(Short Call)：
Expect the underlying stock to go down with low volatility. Call option sellers receive option premium while they are required to meet the margin requirements set by the exchange. Profit comes from the received call premium, and the risk facing is the potential loss resulting from the stock upside. Theoretically the maximum loss is infinity.

2. Put Options

Purchasing Put Options (Long Put)：
Expect the underlying stock to go down. Buyers are required to pay the option premium, and no margin requirement is needed. Profit is subject to the potential profit on the stock downside, and maximum loss is limited to the premium paid to the put options.

Selling Put Options (Short Put)：
Expect the underlying stock to go up with low volatility. Put option sellers receive option premium while they are required to meet the margin requirements set by the exchange. Potential profit comes from the received put premium, and the risk facing is the potential loss on the stock downside. Theoretically the maximum loss is the total amount of the underlying stock.